Category Archives: Bitcoin

Digital Cash – A Beginner’s Guide to Anonymous Digital Currency


Bitcoin and Anonymous Digital Cash

Since the early days of Bitcoin when it became popular as the payment option of choice on the ‘darknet‘ and amongst the merchants of marketplaces such as Silk Road, where buyers could browse through listings for a wide range of illegal drugs and firearms, digital currency – and Bitcoin in particular – has earned a reputation amongst the general public as a way to pay for things anonymously over the internet.

In many ways Bitcoin came to be viewed as if it were a kind of digital cash. Of course cash payments have always been the prefered payment method of choice amongst criminals because of its anonymity, but for the same reason it is also valued by regular members of the public who value their privacy and find the constant monitoring and recording of everything we do on the internet by both governments and corporations to be creepy and unpleasant. There are also other similarities between Bitcoin and cash, as with a wallet installed on your own computer you control your own coins and spend them without needing to have an account with a third party like a bank who can then impose charges on you for using your own money or risk your hard earned money on risky ‘casino banking’ trades.

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Charlie Shrem to plead guilty to federal charges related to Bitcoin transactions


shremOne of the most prominent names in Bitcoin will plead guilty to multiple federal charges in a New York court next Thursday, September 4th. According to Reuters, Charlie Shrem, an entrepreneur who’s made millions off of Bitcoin, has made a plea deal with authorities regarding charges that he illicitly transacted Bitcoin with users of the underground marketplace Silk Road. Shrem’s lawyer tells Reuters that he will plead guilty to the charge of unlicensed money transmission, which carries a maximum prison sentence of five years. He was also charged with one count of conspiracy to commit money laundering, and one count of willful failure to file a suspicious activity report with banking authorities. Combined, those charges carry an additional maximum sentence of 25 years in prison. It is not yet know if Shrem’s co-defendant, Robert Faiella (who allegedly purchased Bitcoins from Shrem before marking them up for sale on Silk Road), will also plead guilty. Shrem was arrested at JFK International Airport late this past January.

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Retailers Who Take Bitcoin Love It


Retailers Who Take Bitcoin Love It

bitcoin shop accepted

IMAGE: MASHABLE COMPOSITE/GETTY CREATIVE KARNOFF

If you’ve been following the news about Bitcoin, you’ve probably come away with the idea that the currency is unstable, potentially lucrative and more of a novelty than an actual payment method that people use on a daily basis.

Retailers who take Bitcoin say something different. For them, the currency is a viable, preferable alternative to credit cards that don’t carry the same risk of fraud and have lower transaction fees. Merchants say bitoin payments aren’t a huge part of their business, but the niche is growing steadily.

“It’s really been fantastic,” says Chris Nichols, CEO of GameTimeZone, an online seller of games and gaming consoles. “We’re a merchant that unfortunately has to worry about credit card fraud. When we see orders from companies like Poland and Eastern Europe and even Western Europe in high dollar amounts, we have to worry.” By contrast with Bitcoin “we know that it’s a safe transaction.”

GameTimeZone began taking bitcoin payments last October. Since then, such orders have encompassed as much as 20% of sales. That appears to be way above average. Online retailer Overstock says bitcoin transactions only account for about 0.25% of daily volume. The retailer posted $1 million in bitcoin-based sales within the first three months of offering the option and just recently hit $2 million in sales.

“It’s limited to a very small community of tech-savvy people,” says Vinny Lingham, CEO and cofounder of online gift card service Gyft, which First Data bought last week for an undisclosed sum. ”

It’s not growing as fast as people would like. It’s just not. It will go mainstream at some point in two- to five years

It’s not growing as fast as people would like. It’s just not. It will go mainstream at some point in two- to five years.”Working with BitPay, Gyft started accepting bitcoins for transactions in spring 2013, making it one of the first retailers to embrace the payment option. A flurry of others soon followed. Bitpay now claims it works with 40,000 businesses and nonprofits that take bitcoin while rival Coinbase claims that it works with 35,000. Adam White, Coinbase’s director of business development and strategy, says the number of merchants is growing about 10% per month.

As Nichols mentioned, credit card fraud is an impetus. When a transaction is found to be fraudulent, the retailer is forced to pay up. To add insult to injury there’s also usually a fine. “It’s 90% to 95% of the transaction cost and on top of that they’ll hit us with a fee, like $20 on top of a $10 sale,” Nichols says.

Another draw for Bitcoin is low transaction fees. While credit card companies can charge up to 3%, Coinbase doesn’t charge anything until there’s $1 million in sales. Then it takes a 1% cut.

Of course, no one believes Bitcoin is risk-free. Robert Siciliano, a McAfee online security expert, says despite the fees, bank-backed credit cards are still preferable. “Relying on an outside company has another set of issues. Remember Mt. Gox? They lost upwards of $450 million in Bitcoins in a hack,” he says. “Which is why it’s nice to have real banks, credit card companies and the FDIC. You know, real entities.”

Coinbase’s White says Bitcoin is the online equivalent of cash, with the same potential benefits and downsides. On the plus side, Bitcoin transactions are processed much quicker than credit card payments. As with cash, though, if you lose possession of bitcoins, there’s often no recourse. “I’m ultimately responsible,” he says. “It’s the same as if I had dollars and a wallet in my pocket.”

Another downside for retailers is that online, bitcoin transactions don’t leave much of a trail. While a credit card payment will yield information about the buyer, with bitcoin, there’s no data to be gleaned.

coffee

Samovar, a West Coast tea parlor, now accepts Bitcoin in stores.

With mass adoption a few years away, for some retailers accepting bitcoin is a marketing play, meant to underscore a brand’s forward thinking. That was Jesse Jacobs’ reasoning. At the moment there are just a handful of retail establishments where you can walk in and actually buy something using bitcoins. One of the early adopters is Jacobs’ Samovar, a small chain of tea lounges in the San Francisco area. In June, Samovar began letting customers pay with bitcoin, which they do by letting Samovar’s Android tablet read the QR code off their phones.

Jacobs says to date about 100 customers have tried bitcoin payments.”We haven’t really stress tested it with thousands of people,” he says. Regardless, merely stating the ability to take Bitcoin can’t help but have a halo effect on Samovar’s brand. Says Jacobs: “This whole technology is just so groundbreaking.”

http://mashable.com/2014/08/06/bitcoin-retailers/ BY TODD WASSERMAN

HELPING BITCOIN TRANSACT WITH TRADITIONAL BANKS


Calgary Startup that Helps Bitcoin Transact with Traditional Banks Raises $8.5 Million

Calgary’s Redfall Technologies Inc. (a.k.a Vogogo) has raised $8.5 million in funding for its Bitcoin risk management services.

The company raised the money from Cormark Securities Inc., Salman Partners Inc., Clarus Securities Inc., Beacon Securities Limited and Canaccord Genuity Corp.

Vogogo provides comprehensive risk management, security, compliance and payment services, enabling cryptocurrency businesses to work with traditional banks and Fiat currencies more easily. Transacting with traditional banks has been a major hurdle for crypto businesses to date, said Vogogo, and is seen as critical to the wide spread adoption and proliferation of these innovation technologies.

It said its technology and services enable crypto currency businesses to meet strict compliance and risk mitigation requirements of conventional banks and regulators. With effective risk management, compliance, and security in place, Vogogo has “assisted in making Canada a reputable region for crypto businesses.”

VogogoLogo

 

Vogogo has already initiated an expansion into the US and it said that will be complete in a matter of months. As for Canada, it claimed that it “captured and effectively services the Canadian crypto industry.”

“This is a another milestone for Vogogo and an endorsement of our potential,” said CEO Geoff Gordon. “The ability for the global crypto industry to meet the stringent requirements of regulators and traditional banks is one of the most significant challenges for the crypto space. Vogogo unlocks potential for growth, collaboration and innovation in the crypto space.”

Vogogo was founded in 2008, when its team designed, built and launched a web-based payment processing technology. They already had expertise in software development, payments, risk management, and related financial services.

The technology was developed to support multiple electronic payments for both the U.S. and Canadian markets and initially started out with integration into several large web based (E-commerce) businesses.

To date, Vogogo has successfully processed more than $1B in US and Canadian payments.

Bitcoin Startups Are Raking in Record Amounts of VC Cash


VCbitcoin01 Aug 2014 / Beta Beat – At first, bitcoin was just the purview of cryptography nerds and libertarian redditors. Since then, digital currencies have been used to fund everything from World Cup betting rings to congressional elections. Now that bitcoin is out in front of legislators and safer than ever to use, investors are starting to pour record amounts into bitcoin startups.

From April through June of this year, bitcoin startups pulled in a record $76.8 million in investments, which is almost as much as the entirety of 2013, CB Insights reports.

The investments are coming in largely from unicorn VCs, but also angel investors like Brock Pierce,Mighty Ducks child movie star and now syndicate leader of 57 angel investors focused on bitcoin startups.

Early on, there were a handful of notable failures — anyone who remembers the Mt. Gox fiasco will sympathise with investors who were hesitant to enter the game early. But it’s been a while since a bitcoin crisis has made headlines, and investors are obviously more confident that cryptocurrency is more than a passing fad.

In another coming-of-age moment, Coinbase recently became the first bitcoin startup to raise a Series B, pulling in $25 million from Union Square Ventures and Andreessen Horowitz.

The momentum shows no signs of slowing. Fintech is heating up, drawing more and more VC investments, and Bitcoin is a significant share of recent fintech investments.

Read more at http://betabeat.com/2014/08/bitcoin-startups-are-raking-in-record-amounts-of-vc-cash/#ixzz399gyDhWy
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Aug 6 2014: Bitcoin price crashes linked to web search surges


Bitcoin price crashes linked to web search surges

bitcoins
Chatter about Bitcoins on social media can influence the value of the virtual currency
A spike in searches for Bitcoins can be a good predictor of an imminent crash in its value, suggests research.

The conclusion emerged from a study of the web activity and social media chatter surrounding the virtual currency by Swiss computer scientists.

Their analysis of who was taking part in this activity helped to explain the meteoric rise in the value of bitcoins.

It might also offer insights into how online communities adapt and grow, suggested the research team.

Key variable

Bitcoin was a great candidate for research because so much of the activity surrounding it takes place online, wrote the team in a paper published in the Journal of the Royal Society. Bitcoins are a virtual currency which depend on people using their computers to both generate the cyber coins and to verify transactions carried out with them.

Currently one bitcoin can be exchanged for $585 (£347).

Studying the “digital traces” of this activity could help lay bare the variables that govern the way the virtual currency behaves said the team.

The four key variables that emerged from the analysis were:

  • the size of the user base
  • the number of searches for information
  • the amount of information shared
  • price

From this the team at the Federal Institute of Technology in Zurich managed to find two positive feedback loops that steadily influence how much each bitcoin was worth.

The first “reinforcement cycle” involves an increase in the amount of searching for information about bitcoins, which leads to more chatter about the currency and prompts a rise in its value.

“The successive price surges in the Bitcoin economy are largely due to its growing public attention,” said the team.

The second feedback loop involves a rise in search volume which makes more people download the software and join in the mining pools that generate coins. This too tends to lead to a rise in the nominal value of Bitcoins.

“Our analysis suggests that the successive waves of growth of the Bitcoin economy were driven by corresponding waves of new users from public circles gradually opening to the currency” wrote the researchers.

In addition, they found found that search spikes were early indicators of an imminent drop in its value but added that this did not act as a good predictor of the biggest falls in the value of bitcoins.

http://www.bbc.com/news/technology-28665262

5 August 2014 Last updated at 20:32 ET

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